Slide 1: Vedanta Limited Q2 FY2017 Results
Vedanta Limited (formerly known as Sesa Sterlite Ltd.) Q2 FY2017 Results 28 October 2016 VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION Results conference call details are on the last page of this document
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from statements. We do not undertake to update our forward-looking publicly available sources that have not been independently verified. statements. We caution you that reliance on any forward-looking statem
Slide 3: Contents
Contents Section Presenter Page Strategic Update Tom Albanese, CEO 4 Financial Update Arun Kumar, CFO 10 Business Review Tom Albanese, CEO 19 Appendix 28 VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION 3
Slide 4: Strategic Update
Strategic Update Tom Albanese Chief Executive Officer VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION
Slide 5: Safety and Sustainability
Safety and Sustainability Health, Safety and Environment LTIFR (per million man-hours worked) Building a Zero Harm Culture 1.0 0.89 Line Leadership coaching programme in progress 0.9 0.8 Interactions with business executive leadership on accountabilities 0.7 and support for line leaders 0.6 0.
Slide 6: Delivering on all fronts
Delivering on all fronts Ramping up production as guided − Focus on ramp-up at Aluminium, Power and Iron ore − On track for higher production in H2 at Zinc India Higher FCF driving deleveraging − Strong EBITDA margin at 39% − Continued focus on cost optimization and FCF generation Commodity pr
Slide 7: Q2 FY2017 Results Highlights
Q2 FY2017 Results Highlights Operations: Production ramp-up on track Group EBITDA mix Aluminium: Smelters continue to ramp-up, production run-rate of Q2 FY2017 Q2 FY2016 1.1mtpa (excluding trial run) and 1.2mtpa (including trial run) 2% 0% Power: TSPL 3rd unit capitalized; overall plant availabi
Slide 8: Aluminum, Power and Iron Ore ramping up
Aluminum, Power and Iron Ore ramping up Aluminium production (kt) 450 Aluminium production Q2 exit run rate of 1.2mtpa 400 350 300 250 − Impacted by pot outages at Jharsuguda and BALCO, but no significant change in full year 200 150 100 50 guidance 0 Q4'16 Q1'17 Q2'17 Q4'17e TSPL Production (mn un
Slide 9: Commodity prices: Benefits of diversification and resilient margins
Vedanta: Benefits of diversification and resilient margins Vedanta’s diversified portfolio significantly reduces volatility Aluminium Zinc Copper Iron Ore 62% Silver Brent Oil VED commodity Basket¹ 160 150 48% (01 Jan 2016 = 100) Commodity prices 40% 140 34% 130 33% Vedanta commodity 120 27% Basket1
Slide 10: Financial Update
Financial Update Arun Kumar Chief Financial Officer VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION
Slide 11: Q2 Financial Highlights
Q2 Financial Highlights EBITDA up 31% q-o-q and 8% y-o-y; strong EBITDA margin of 39% Driven by strong operating performance and higher commodity prices EBITDA and Attributable PAT highest in last seven quarters Strong Free Cash Flow post capex of c. Rs. 2,600 crore Continued deleveraging,
Slide 12: EBITDA Bridge
EBITDA Bridge Q2 FY2017 vs. Q1 FY2017 (In Rs. Crore) Zinc 379 Oil & Gas 85 Zinc and Lead 443 Power 70 Brent Discount 108 Aluminium 55 Iron ore (264) Aluminium 72 Others 8 Metal Premiums (11) Others 10 5,000 161 38 35 4,640 333 37 27 11 4,143 622 1 3,543 3,000 Operational Rs. 532 crore Market & Regul
Slide 13: Cost Savings and Marketing Initiatives
Cost Savings and Marketing Initiatives Cost and marketing savings program ($mn) Achieved cumulative savings of $421 mn in last 18 months 1,300 $391 mn in Cost and Marketing savings $30 mn in capex savings 171 421 250 $38 Mn Fresh 1,000+ initiatives across businesses being implemented $67 Mn
Slide 14: Income Statement
Income Statement Depreciation Q2 Q2 Q1 In Rs. Crore − Higher q-o-q on account of capitalization of new capacities at FY’17 FY’16 FY’17 Aluminium and Power EBITDA 4,640 4,281 3,543 − Flat y-o-y as capitalization of new capacities at Aluminium and Power offset by lower depreciation at Cairn (lower v
Slide 15: Net Debt for Q2 FY 2017
Net Debt for Q2 FY 2017 (In Rs. Crore) 30,000 24,654 10,434 25,000 FCF Post Capex Rs. 2,613 Crore 20,000 15,000 14,220 4,022 14 11,961 1,448 68 272 228 542 275 10,000 5,000 ‐ Net Debt 30 Operational Net Debt 30 Cash Flow from WC Debtors & Sustaining Project Capex DDT Dividend Translation Net Debt Ju
Slide 16: Optimising Capex to drive Cash Flow Generation
Optimising Capex to drive Cash Flow Generation Prioritised capital to high-return, low-risk projects to maximise cash flows Growth Capex Profile and Free Cash Flow pre capex - $bn Oil & Gas Capex Zinc Capex Capex for FY 2017 expected to be $0.8bn ($1bn earlier) Al & Power Capex Free Cash Flow (p
Slide 17: Balance Sheet and Maturity Profile
Balance Sheet and Maturity Profile Maturity Profile of Term Debt ($8.8bn) (as of 30th September 2016) Subsidiaries Standalone 2.2 0.5 1.7 1.7 0.7 0.7 1.2 1.1 0.9 0.3 0.5 0.3 1.6 1.0 1.1 0.8 0.7 0.6 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 & Later External term debt of $8.8bn ($5.8bn at Standalone a
Slide 18: Financial Priorities leading to a stronger Balance Sheet
Financial Priorities leading to a stronger Balance Sheet Disciplined Capital Allocation: Ramp-ups at Aluminium, Power and Iron ore to generate significant cash flows Optimising capex, Continued optimization of Opex and Capex focus on FCF Deleveraging; Continued reduction in debt Strong Liquidi
Slide 19: Business Review
Business Review Tom Albanese Chief Executive Officer VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION
Slide 20: Zinc: Fundamentals supporting performance
Zinc: Fundamentals supporting performance CY2016 Global Zinc Cost curve Global Zinc concentrate deficit supporting zinc prices (kt) 800 Century closure US$/t (500ktpa) Dugald River 600 (210 ktpa) 2,000 Lisheen closure (160 ktpa) Gamsberg 400 (250ktpa) to Gamsberg commence 1,700 Zinc Intl 200 Hindust
Slide 21: Zinc India
Zinc India Q2 Results Rampura Agucha Mine – Longitude Vertical Section Metal in concentrate(MIC) production at 192kt, 51% higher q-o-q as per the mine plan +13mRL Refined zinc production at 149kt, in line with MIC ‐80mRL 1st quartile position on global cost curve Present Working ‐130mRL Projec
Slide 22: Zinc International
Zinc International Skorpion and Black Mountain Results Quarterly production of 39kt Skorpion metal production at 23kt, driven by higher grades and better recoveries Production of 16kt at BMM, impacted by shutdown Q2 CoP at $1,446/t mainly on lower production volumes at BMM Outlook Skorpion
Slide 23: Oil & Gas
Oil & Gas Results MPT: Facility modifications Mangala EOR, world’s largest polymer program EOR production reached 52 kboepd, 24% higher q-o-q Rajasthan production stable at 168 kboepd in Q2 RJ water-flood cost at $3.9/boe down 12% q-o-q, lowest in last 10 quarters; blended cost at $5.8/boe,
Slide 24: Aluminium
Aluminium Smelters continue to ramp-up, partially impacted by pot outages Aluminium Costs and Margins Record quarterly production at 296kt (in $/t, for Q2 FY2017) Ramp-ups impacted by pot outages Q1’17 1,572 127 53 1,752 (540) (622) (313) (70) $207/t (213) (427) (433) Jharsuguda-II: 168 pots i
Slide 25: Power
Power Results Power Generation Capacity – c. 9GW TSPL: Plant availability of 77% in Q2 CPP:5.1GW IPP: 3.6GW • 1,215MW Jharsuguda Unit-III capitalized on 1st September • 600MW Jharsuguda • 3*600MW Jharsuguda (of BALCO 600MW IPP: 54% PLF in Q2, impacted by weak power (of 2400MW plant) 2400MW pla
Slide 26: Iron Ore and Copper India
Iron Ore and Copper India Iron ore Goa iron ore costs and margin (H1 FY2017, US$/t) Sales of 0.8mt in Q2; mining and shipping at Goa resumed post monsoon at 57 12 end of Q2 Goa operations achieved over 40% of annual allocated mining capacity in Q1 6 2 6 37 Karnataka sales of 0.5mt in Q2 7 En
Slide 27: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Production Growth and Asset optimisation − Disciplined approach towards ramp up Delever the Balance Sheet − Reduce gross debt − Continued optimisation of opex and capex − Continued discipline around working capital Simplification of the Group structure − Complet
Slide 28: Appendix
Appendix VEDANTA LIMITED – Q2 FY2017 RESULTS PRESENTATION
Slide 29: Vedanta Ltd. – Cairn India merger: Transaction timetable
Vedanta Ltd. – Cairn India merger: Transaction timetable Key Event Expected date BSE, NSE and SEBI approvals sought Completed BSE, NSE and SEBI approvals Completed Application to High Court in India Completed Vedanta plc posting of UK Circular Completed Vedanta plc EGM Completed Vedanta Limited shar
Slide 30: EBITDA Bridge
EBITDA Bridge Q2 FY2017 vs. Q2 FY2016 Zinc India (534) (In Rs. Crore) Oil & Gas (36) Zinc and Lead 535 Lisheen (52) Discount to Brent 95 Iron ore 75 Aluminium 43 Power 192 Brent (161) Others 114 Metal Premium (11) Others (55) 51 100 153 48 4,879 241 132 10 5,000 446 140 4,640 4,281 3,000 Operational
Slide 31: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. Crore) 30 September 2016 30 June 2016 30 September 2015 Company Cash & Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Net Debt LI Vedanta Limited 41,285 2,114 39,171 35729 1,216 34,513 29,101 2205 26,896 Standalone Zinc India 1928 27,186 (25,258) 3,911 26,839
Slide 32: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $ 8.8bn Debt Breakdown (as of 30 Sep 2016) (as of 30 Sep 2016) Short Term Loans - USD Debt breakdown (in $bn) 3% External term debt 8.8 Bonds-INR Working capital1 0.5 Money market 20% Instruments – INR 22% Short term borro
Slide 33: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 % OIL AND GAS (boepd) % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Average Daily Total Gross Operated Production 206,230 214,247 -4% 206,455 206,342 216,081 -5% (boepd)1 Average Daily Gross Operated Production (boepd) 196,399 205,361 -4% 196,861
Slide 34: Segment Summary – Zinc India
Segment Summary – Zinc India Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Mined metal content 192 240 -20% 127 318 472 -33% Refined Zinc – Total 150 211 -29% 102 252 398 -37% Refined Zinc – Integrated 149 211 -30% 101 250 398 -37%
Slide 35: Segment Summary – Zinc International
Segment Summary – Zinc International Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Refined Zinc – Skorpion 23 17 37% 24 47 42 10% Mined metal content- BMM 16 16 2% 19 35 31 14% Mined metal content- Lisheen - 31 - - - 60 -% Total 39
Slide 36: Segment Summary – Aluminium
Segment Summary – Aluminium Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Alumina – Lanjigarh 292 272 8% 275 567 541 5% Aluminium- Total Production 296 233 27% 244 541 464 17% Jharsuguda –I 132 130 1% 129 261 262 0% Jharsuguda –II1
Slide 37: Segment Summary – Power
Segment Summary – Power Q2 Q1 H1 Particulars (in million units) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Total Power Sales 3,030 2,718 11% 3,010 6,039 5,789 4% Jharsuguda 600 MW(FY 2016 nos are 2400 MW)1 605 1,554 -61% 892 1,497 3,820 -61% Balco 270MW2 - 28 - - - 128 - Balco 6
Slide 38: Segment Summary – Copper India
Segment Summary – Copper India Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Copper - Mined metal content - - - - - Copper - Cathodes 97 94 3% 100 198 193 3% Tuticorin power sales (million units) 30 118 -75% 60 90 293 -69% Financial
Slide 39: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q2 Q1 H1 Particulars (in million dry metric tonnes, or as % stated) % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Sales 0.8 0.6 25% 2.6 3.4 1.2 - Goa 0.3 - 2.1 2.4 - Karnataka 0.5 0.6 -27% 0.5 1.0 1.2 -14% Production of Saleable Ore 1.5 0.8 78% 3.2 4.7 1.0
Slide 40: Sales Summary
Sales Summary Sales volume Q2 FY2017 H1 FY2017 Q2 FY2016 H1 FY2016 Q1 FY2017 Zinc-India Sales Refined Zinc (kt) 148 268 217 398 120 Refined Lead (kt) 32 55 40 70 23 Zinc Concentrate (DMT) - - - - - Lead Concentrate (DMT) - - - - - Total Zinc (Refined+Conc) kt 148 268 217 398 120 Total Lead (Refined+
Slide 41: Sales Summary
Sales Summary Q2 H1 Q2 H1 Q1 Q2 H1 Q2 H1 Q1 Sales volume FY2017 FY2017 FY2016 FY2016 FY2017 Sales volume FY2017 FY2017 FY2016 FY2016 FY2017 Power Sales (mu) Iron-Ore Sales Jharsuguda 2,400 MW 605 1,497 1,554 3,820 892 Goa (mn DMT) 0.3 2.4 - - 2.1 TSPL 1,679 2,951 693 1,077 1,272 Karnataka (mn DMT)1
Slide 42: Group Structure
Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 62.9% Sesa Iron Ore Konkola Sterlite Copper (Tuticorin) Copper Vedanta Ltd Power (600 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Subsidiaries of Vedanta Ltd 59.9% 64.9% 51% 100% 100% 100% 1
Slide 43: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on Friday, 28 October 2016. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on Mumbai main access 28 October 2016 India – 6:00 PM (IST) +91 22 3938 1017 Mumbai stan